August 10, 2022


The Exceptional Law Purveyors

Next-generation Perspectives on Taiwan | Strengthening Transatlantic Cooperation

Level Up: Upgrading US-Taiwan Technology Cooperation

by Daniel Aum

China remains fixated on reclaiming Taiwan as its own. Indeed, China’s armed forces continue to prioritize technological reforms that would improve their chances of overtaking the island.
Beijing has directed a great deal of attention and resources to upgrading the nation’s overall technological power, including in innovation, the digital economy, and cyber capabilities. The United States and Taiwan must contend with this multidimensional challenge, while dealing with the enduring impact of the coronavirus pandemic, supply chain shortages, and most recently, Russia’s invasion of Ukraine. To be sure, a potential Chinese invasion of Taiwan would feature a whole-of-government approach by the Chinese Communist Party (CCP). Responding to these multifaceted challenges will require a similar all-of-government approach from the United States and Taiwan. Thus, Washington and Taipei should seek to increase their cooperation through a new technology partnership encompassing security, diplomatic, information, and economic domains.

The Chinese Threat and Digital Capabilities

The CCP has long desired to reunify Taiwan with mainland China.
 To the CCP, Taiwan represents something more valuable than mere territory: it represents the last vestige of China’s century of humiliation, when foreign powers colonized and divided the country during the 19th and early 20th centuries.
 Reunifying with
Taiwan would allow the CCP to finally close this chapter of its history. Moreover, the continued existence of Taiwan poses a legitimacy issue. If the CCP cannot exercise control over what it views and declares to be the sovereign territory of the People’s Republic of China, then its legitimacy to govern the Chinese people is undermined.
The CCP thus views the United States’ longstanding support and defense of Taiwan as interference into domestic Chinese affairs.
Perhaps most importantly, by taking Taiwan the CCP would eliminate a robust, Chinese-style democracy and market economy that challenges its own model of authoritarian governance. The timeline for taking Taiwan, however, remains unclear, even though China’s President Xi Jinping has repeatedly pledged to complete reunification.

Over the past three decades, China has launched major initiatives to strengthen its capabilities in military technology, civilian innovation, and cyber power. Since the Gulf War in 1991, when the US military displayed its technology dominance over Iraq, Beijing has focused on the ability to win in modern, networked warfare conditions.
 Between 2006 and 2010, China began a new industrial policy, culminating in the release of the Medium- and Long-Term Program of Science and Technology, concentrating on industries for indigenous growth.
 Since 2010, China appears to have yet again shifted its center of attention. Rather than just building upon mega-projects and investing in known fields, its leaders are now hoping to leapfrog its competitors by betting on emerging technologies. Outlined in the Strategic Emerging Industries program, the new approach unveils China’s ambition to take a leading role in next-generation technology, including in information technology, biotechnology, and high-end machinery.
 To staff its technology industry, China has launched campaigns to attract the best talent, including from Taiwan, by offering large pay raises, free trips home, and heavily subsidized housing and education benefits.
 In 2016, China tied these various programs together under the overarching Innovation-Driven Development Strategy, backed by over a trillion dollars.

Moreover, alongside its Belt and Road Initiative, composed of the land-based Silk Road Economic Belt and the sea-based 21st Century Maritime Silk Road, China has launched a comprehensive strategy to reshape the global digital architecture.
 A Chinese-led digital system would generally reflect the CCP’s preferred frameworkone that reduces tariffs on digital goods and services, but also limits data flows, requires data localization, and favors domestic firms.⁠
 Even as the CCP leadership continues to add new programs, such as in military-civil fusion, artificial intelligence, and information and services, the goal remains the same: to not only catch up with, but to surpass the United States in technological supremacy.

While the CCP builds up its preferred digital framework, it has sought to erode digital systems in Taiwan and the United States. China has deployed persistent cyber operations against Taiwan, since at least 1999.⁠
 The Taiwanese authorities estimate that government systems face 20 to 40 million cyberattacks every month.
 In 2017, the Department of Cyber Security reported that 288 of 360 successful attacks on government systems originated from Chinese networks.⁠
 China has coupled cyberattacks with influence operations in Taiwan to erode support for President Tsai Ing-wen and her administration.
 Chinese cyber operations have also targeted US commercial and government entities, breaching a variety of sectors such as defense, health care, transportation, and energy.⁠

Meanwhile, the United States and Taiwan have had to address the wide-ranging domestic impacts of the coronavirus pandemic, shore up supply-chain gaps, and support Ukraine against Russia’s invasion without igniting a global conflagration.

US-Taiwan Technology Collaboration

Recognizing these challenges, the United States and Taiwan have taken steps to deepen their cooperation in key areas of technology. Last December, they announced the creation of the Technology Trade and Investment Collaboration (TTIC) framework to develop commercial programs and explore ways to strengthen critical supply chains,
 especially in semiconductors.
 The TTIC builds on the existing lines of effort to promote trade. In 2020, the two sides had established the US-Taiwan Economic Prosperity Partnership Dialogue (EPPD) to identify broad areas for economic collaboration and cooperation, including global health security, science and technology, 5G and telecommunications security, supply chains, women’s economic empowerment, infrastructure cooperation, and investment screening.⁠
 This dialogue complements the foundational US-Taiwan Trade and Investment Framework Agreement (TIFA) signed in 1994, which establishes trade and investment dialogues between US and Taiwanese authorities.
 After a hiatus in TIFA meetings, in 2021 Washington and Taipei agreed to renew discussions through an assortment of working groups on agriculture, labor, intellectual property, investment and trade barriers, and other issues.⁠
 Finally, since 2015, the United States and Taiwan have cooperated on sharing Taiwan’s technical expertise with other countries on the digital economy and cybersecurity, among other issues, through the Global Cooperation Training Framework (GCTF).

Both the United States and Taiwan are backing up cyber policy initiatives with additional spending. In March 2022, President Joe Biden announced a FY23 budget that includes an 11 percent funding increase for civilian cybersecurity, amounting to a total of $11 billion.
 For its part, Taiwan’s executive branch proposed spending $1.86 million on cybersecurity in FY22, which was more than double the amount it had spent just two years prior.

In addition to these existing lines of efforts, there is more the United States and Taiwan could do to promote their common interests and shared political objectives through collaboration on technology. Cooperation is still missing some realms, such as digital standard setting. In other areas, the two parties could better integrate ongoing efforts across different agencies, as security, diplomacy, trade, and information issues overlap with each other.              

Options for a Tech Upgrade

China is employing massive resources to build up its technological capabilities, and a full-scale invasion of Taiwan would feature the fruits of its decades-long investments into the security, economic, diplomatic, and information domains. Preparing for such an invasion, and deterring China’s gray-zone activities short of war, will require a similar all-of-government approach from the United States and Taiwan. Thus, Washington and Taipei should establish a technology partnership that cuts across security, diplomacy, information, and economy dimensions. This partnership could incorporate the existing lines of efforts in the TTIC, EPPD, TIFA, and GCTF, and serve as the chief organizing mechanism on technology issues. Drawing upon the United States’ efforts with Japan and the European Union, among others, the US-Taiwan technology partnership could be expanded in the following areas.

Enhance Joint Cyber Training Operations   

In 2019, the United States and Taiwan led a joint exercise simulating cyberattacks against the island.
 Taiwan had for years petitioned to join US-led international cyber simulations known as the Cyber Storm exercises.
 The two parties have built on these exercises to engage in wide-ranging discussions on joint cybersecurity cooperation.
 Because Taiwan has been a frequent target of China’s cyber offensive capabilities, it has developed valuable experience in combatting their operations. Building on existing efforts, the two sides should upgrade their cooperation with regular dialogues between governments and businesses, joint cybersecurity exercises, and shared intelligence to help fend off attacks. Some experts have argued that Taiwan should allow the United States to have direct access to Taiwanese networks,
 so that Washington can help bolster the island’s defenses, perhaps similar to the way it has been improving Ukraine’s cyber defenses for years.

Pursue Open 5G Architecture Through Joint Research and Development

5G networks are faster and connect more devices than 4G networks, allowing for commercial and battlefield advancements, including in intelligence, surveillance, and command and control.⁠
 To develop standards to make cellular equipment interoperable and cheaper,⁠ in 2018 a telecommunications consortium founded the Open Radio Access Network Alliance (O-RAN).
 Some analysts interpreted O-RAN as the Trump administration’s attempt to counter Huawei’s dominance in the 5G market.⁠
 But O-RAN’s efforts have stalled as Nokia, one of its three largest suppliers, raised concerns about the group’s membership including China Mobile, a Chinese company that was blacklisted by the Federal Communications Commission due to national security concerns.
 This year will be critical for O-RAN to prove its viability against competitors,⁠
 as it has yet to show much for its hype and investment. To ensure reliability, lower costs, and improve network security, the United States and Taiwan should promote the O-RAN architecture and fund programs that support this approach, including through the passage of the US Innovation and Competition Act.

Enhance the Talent Pool in Taiwan

A key challenge to Taiwan’s economy is an inadequate supply of talented and qualified next-generation specialists to replace the talent pool, especially as many are lured away to China.
 Taiwan’s workforce could be improved if the United States were to help internationalize it. Relevant efforts could include offering language training, promoting opportunities for educational and professional experiences abroad, and improving existing efforts to make English the official language of work in certain critical sectors,
 such as
in technology, finance, and export-oriented industries.
 The United States could also encourage Taiwan to attract more foreign talent by easing work and visa entry policies, closing the pay gap between domestic and international workers, and offering scholarships to foreign students seeking to study or work in Taiwan early in their careers.

Negotiate a US-Taiwan Free Trade Agreement

Building on the TIFA, the United States and Taiwan should pursue negotiation of a free trade agreement (FTA).
 With the proper provisions, the FTA would strengthen trade linkages, help mitigate the chip shortages in the United States, and improve the competitiveness of both economies. An FTA should include a digital trade provision—similar to those negotiated in the US-Mexico-Canada agreement and US-Japan agreement—that establishes high standards for protecting data, reduces digital services taxes, and enforces intellectual property rights consistent with the principles of maintaining fair, open, and competitive markets.

Align Bilateral Efforts to Prepare for Multilateral Engagement  

In pursuing the efforts above, the United States would help align Taiwan with existing international efforts such as the Cyber Storm training operation, the international coalition in O-RAN, and a growing number of technology arrangements, such as the US-EU Technology and Trade Council. As there appears to be a growing recognition that Europe’s interests are deeply tied with Taiwan,
 it would be to Taiwan’s advantage to position itself for even greater EU collaboration. The United States could play a key role in facilitating stronger EU-Taiwan ties, such as through encouraging EU cooperation in the GCTF, harmonizing US and EU messaging on Taiwan, and preparing contingency plans for the European NATO members to increase their military responsibilities in the North Atlantic region, freeing up US military forces to come to the defense of the Taiwan in the event of a Chinese invasion.

Technology—a Means to an End

China would naturally push back on any efforts to upgrade the US-Taiwan relationship, perceiving such initiatives as interferences into domestic affairs. But the purpose of this agreement would not only be to defend US and Taiwanese interests against potential Chinese aggression; it would also seek to strengthen the parties’ respective national technological bases, to exploit areas of mutual technological benefit, and to promote thicker bonds of dependence short of a clear security commitment. While such an agreement may provoke China, the alternative is to not take these steps for self-protection and enhancement, leaving its interests vulnerable to threats from Chinese, Russian, and other state and non-state actors.

The CCP leadership has vowed to reunify Taiwan with Mainland China, and its technological capabilities to pressure and eventually take control of the island continue to grow. The United States and Taiwan are already collaborating in many ways to mutually improve their own capabilities, which in turn increases their ability to deter Chinese aggression. A formal technology agreement would further elevate the importance of this relationship between these democratic partners. It would provide practical benefits to both sides in defense, cyber and information operations, and the economy. And it would pave the way for them to expand these types of technology partnerships with other countries through bilateral and multilateral mechanisms. In the long run, the whole of the US-Taiwan technology partnership could prove more valuable than the sum of its parts.